12/27/2005 @ 6:00AM

Michael Noer On Digital Entertainment

The newest generation of powerful videogame consoles is starting to hit the market–Microsoft‘s
Xbox 360 is out; Sony‘s
PlayStation 3 is expected in spring, 2006; Nintendo is developing a successor to the GameCube, dubbed Revolution, for a likely late-2006 launch. These systems powerful graphics-processing capabilities promise to make the next wave of videogames far more immersive (and addictive) than current titles. They are also being positioned as far more than just mere gaming machines as both Sony and Microsoft continue to vie for control of the digital living room. Expect that to drive further sales of large, high-definition television sets.

The Unconventional Wisdom

Xbox 360 will be a flop. Microsoft rushed to get its system out for the 2005 holiday season, and it shows. The launch titles are, at best, uninspired. Worse, Ubisoft is now saying that the 360 version of one of the most anticipated games, King Kong, is essentially unplayable on a regular TV and needs an HD set. Gaming blogs and Web sites are chock-full of complaints alleging that the 360 freezes, overheats and crashes. Throw in early supply shortages, a hefty price tag ($400 for the console plus a few games at $60 a pop) and many gamers are going to wait for the PlayStation 3.

The Misplaced Assumption

That Internet piracy is hurting the movie business. There is no compelling evidence to suggest that
Napster
-style trading of movies is harming Hollywood. First, movies are much larger (think gigabytes rather than megabytes) than songs. Even with a broadband connection and a sophisticated file-sharing schema like BitTorrent, illegally downloading and swapping movies is far more difficult than trading songs. Plus, DVDs are cheap. It takes a committed, intellectual property pirate to spend hours downloading a movie when one can go out and buy the film for, say, $12. The problem is movie pirates, mainly in Asia, who surreptitiously videotape new movies in the theater to make knock-off DVDs.

2006 will be the year that broadband distribution of videogames takes off. Microsoft’s Xbox Live service has proven that players will happily connect to the Web to play against each other and to get software patches and updated rosters (for sports games in particular). The next step–buying entire games–is obvious and will prove incredibly popular. That spells bad news for retail game stores like Game Spot, although they will continue to do a brisk business in used games.